Stopping mobile subisdies: playing with dynamite

As I mentioned in a previous post SIM only plans are getting traction in mature markets where they amount already 20% of the new contracts. To such extend that some operators are considering abandoning the subsidy of devices. Operators find it costly and more and more difficult to manage.

Wouldn’t it be a better market if consumers paid the real price for devices?

Wouldn’t be better for device manufacturers not to have their price pressured by operators?
It’s all very fine, but let’s look at the Japanese device market where subsidies have been banned in 2007.

The shipments shrank by nearly one third within 2 years from 53M devices in 2007 to 35M units in 2009. It didn’t impact much operators, but now managing migrations from one technology to the other (e.g. 3G to LTE) cannot be achieved by ranging the new devices and putting more money on the table.

Japan shipments

Japan mobile shipments

Japan shipments graph

Japan shipments graph

Stopping subsidizing mobiles will impact dramatically manufacturers: the biggest will suffer and the smallest will disappear or merge with the medium ones. In Japan Hitachi, NEC and Casio merged their mobile divisions this year.

Furthermore it will slow the whole industry agility to adopt new technologies and services. Is it the price to pay for a virtuous ecosystem?

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One thought on “Stopping mobile subisdies: playing with dynamite

  1. Pingback: Consolidation in the Japanese market « Mobiles and Butterflies

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